Arnold Kling points to a piece by Terry J. Fitzgerald in the Minneapolis Fed Review. The finding "...Rather than falling by 4 percent over the past 30 years, average hourly earnings have actually risen by 16 percent."
Given the nature of technological growth, I am not sure how you can measure this with any accuracy whatsoever. Using a standard measure of inflation, I am pretty certain that the income my parents had in 1977 was higher than the income of my wife and I today. But consider the following:
I know the agencies around the world that compile inflation statistics take the issue very seriously. But there is only so much you can do when the basket of goods are so vastly different between the two periods.
Given the nature of technological growth, I am not sure how you can measure this with any accuracy whatsoever. Using a standard measure of inflation, I am pretty certain that the income my parents had in 1977 was higher than the income of my wife and I today. But consider the following:
- My wife and I each have laptops. My parents? They had a single typewriter.
- My wife and I have two DVD players and the ability to record TV shows. My parents? They received grainy analog TV signals and had no ability to record shows. If they stayed out on Sunday night and missed Quincy, they might never see the episode again.
- My wife and I have a set of cordless telephones with 5 handsets and 2 cellphones which we can slip into our pockets anywhere we go. My parents? They had a single dial telephone.
- My wife and I have internet access and have access to a wealth of information. My parents? They had a dictionary (a very nice one which we still use!) I doubt they had an encyclopedia set - the cost would have been just too prohibitive.
- My wife and I have a Wii. My parents? Well, my sister and I got a Colecovision for Christmas in 1982. In 1977? They could have bought a Pong machine or the brand new Atari VCS (Atari 2600) for the low (non-inflation) price of $199. Mind you, it did come packaged with the game Combat, which is still fun to play!
- Does anyone remember the state of denistry in 1977? We've come a long way.
I know the agencies around the world that compile inflation statistics take the issue very seriously. But there is only so much you can do when the basket of goods are so vastly different between the two periods.
Comments
The next step is to compare your parents in 1977 to their parents in 1937 and attempt to determine if the improvement from 1937 to 1977 was greater then the improvement from 1977 to 2007. I suspect the improvement from 1937 to 1977 was much greater then the change from 1977 to 2007.
We are not talking about absolute change, the question is what has happened to the rate of gain and Kling nor you address that question.
For example, my family first got a party line phone in 1948. Which was the greater increase in standard of living — going from no phone to a party line in 1948 or going from a land line to a cell phone in 1998.
You are right that getting a cell phone was an improvement in the standard of living and it is incorporated into the data. But you do not attempt to compare it to the improvement of getting one’s first phone. I would argue that getting one’s first phone was a much bigger improvement in living standards.